Fears economic watchdog could create conflict of interests

PLANS to create a high-powered new Scottish economic watchdog, equivalent to the UK's Office for Budget Responsibility, have been thrown into confusion following fears it would not be impartial.

MSPs have refused to endorse key personnel nominated for the new body by Finance Secretary John Swinney amid concerns they would face a conflict of interest in their proposed new roles scrutinising the Scottish Government.

Two of the three nominees, Lady Susan Rice, the managing director of Lloyds Banking Group, who was Mr Swinney's choice to chair the body, and economist Professor Andrew Hughes Hallet, already serve on First Minister Alex Salmond's Council of Economic Advisers.

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MSPs on Holyrood's finance committee have questioned whether they should also join the proposed new Scottish Fiscal Commission, which is intended to provide an independent analysis of the Scottish Government tax forecasts and budget plans.

Conservative MSP Gavin Brown, a member of the finance committee, said: "There are genuine concerns on the committee and further afield that having two of the three nominees on both the Council of Economic Advisers and the new Scottish Fiscal Commission is unwise.

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"The role of the council is to give advice on economic matters, while the place of the fiscal commission is to provide challenge and scrutiny to the decisions based on that advice.

"It strikes me that there could be a conflict of interests, and there most certainly will be a perception of a conflict of interests, if this goes ahead."

Details of the stand-off emerged yesterday when the convener of the finance committee, SNP MSP Kenneth Gibson, wrote to Mr Swinney asking whether he believed a conflict of interest, real or perceived, may arise.

Both Lady Rice and Professor Hughes Hallett said any possible conflicts of interests could be addressed as they arose when they were interviewed by the finance committee last week as part of the appointment process.

Had the finance committee backed Mr Swinney's nominations, parliament was due to formally approve their appointment next week.

But in light committee's request for "clarification" from the Finance Secretary, the planned vote has been replaced with a debate on climate change.

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The proposed Scottish Fiscal Commission is being set up as part of the transfer of new tax powers from Westminster to Holyrood.

A Scottish Government ­spokeswoman said:"The Scottish Government welcomes the steps taken by Parliament to assure itself of the suitability of nominees for appointment to the Commission, which will then further strengthen its independence."

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